Appreciation is an increase in the value of an asset over time. This is one of the main reasons why investors hold certain assets, such as common stock, real estate, rare coins, and art work.
There are a number of reasons why assets can appreciate, including the following:
- The supply of an asset may become restricted
- The demand for an asset may increase
- The inflation rate may increase (though the resulting appreciation may in fact be depreciation when the increase is adjusted for inflation)